With Stats NZ citing 1 in 50 people in the New Zealand population are now aged 85-plus and forecasting this figure could increase to about 1 in 30 during the 2030s, and to about 1 in 20 in the 2040s, the provision of aged care in this country is of mounting interest.
Institutional investors are active in the aged care market, and New Zealand’s leading providers are listed on the stock exchange here and in Australia showing the weight the sector has in investment circles.
The aged care asset class, for facilities under proven management, are proactively being scoped by investors who are recognising population indicators and looking for opportunities in the wider healthcare sector.
With private investors seldom able to compete with bigger players for institutional grade assets in the main centres, agents say three aged care facilities in regional New Zealand now for sale have compelling investment fundamentals for individuals or trusts wishing to secure a presence in this niche and defensive sector.
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Having 30-year triple net leases from March 2022 in place to private aged care provider Heritage Lifecare Limited, the care facilities in Te Puke, Palmerston North and Blenheim are part of Heritage’s more-than 40-strong network around the country.
Additionally, the leases each have three further rights of renewal of 20 years each, extending the potential lease term out to 2112, and have built-in rental growth.
Heritage Lifecare is one of New Zealand’s largest providers of residential aged care services, with a presence across both North and South Islands, using its scale and resources to efficiently run its family-focused care homes, with centralised administrative functions and a strong operational focus on resident care.
The land and buildings associated with Carter House Lifecare in Te Puke, Karina Lifecare in Palmerston North, and Waterlea Lifecare in Blenheim are for sale separately, or in combination, via a deadline private treaty campaign with Bayleys.
The properties are being marketed by Sunil Bhana and Mike Houlker, Bayleys Auckland along with agents on the ground in the regions – Brendon Bradley from Bayleys Tauranga, Karl Cameron from Bayleys Manawatu, and Glenn Dick of Bayleys Marlborough.
The sale campaigns for each property close 4pm, Thursday 10th August, unless sold prior.
Bhana says the individual properties provide an affordable step into an institutional grade asset, with the triple net lease structure vastly superior to the majority of standard commercial leases given the landlord is insulated from all costs and maintenance of the property to the maximum extent permitted by law.
“Demand for aged care real estate within New Zealand will continue to increase due to the undersupply of existing and new facilities and an increasing ageing population,” he says.
“Bayleys recently sold another Heritage Lifecare-occupied offering in Tauranga with the identical lease structure, showing proven demand for a regional aged care asset that is a completely hands-off investment proposition.
“The three properties we now have for sale have the quality of tenant and inherent lease structure of a corporate nature, providing a landlord with long-term tenure, a steady and consistent revenue stream, and without any direct property management required.”
With the age of entry into aged care beds in New Zealand typically 85 years and above, and the growth of this age segment expected to be rapid, Houlker says the three aged care assets are all located in popular retirement locations that draw from an ageing surrounding catchment, supporting the ongoing demand for aged care facilities.
“These properties not only have strong, proven tenant covenant and exceptionally-robust long leases, they are further underpinned by rising land values – particularly for centrally-located land.
“The care facilities are located on large residentially-zoned sites, with the Te Puke property recently being rezoned to medium density residential which is a favourable long-run development zoning.”
Carter House Lifecare at 69 Moehau Street, Te Puke is a medium-scale 65-bed care complex providing full rest home care services, sited on 12,761sqm of land, and returning current annual net income of $566,592 plus GST.
In addition to the land and buildings associated with this care facility, the landlord also owns the land beneath eight detached buildings housing 17 independent living units around the perimeter of the site, with the tenant owning these buildings themselves, but with the land they occupy forming part of the property’s lease arrangement.
Karina Lifecare at 11-15 Karina Terrace in the Palmerston North suburb of Roslyn, close to the CBD, amenities and the hospital, occupies an elevated 3,485sqm site and comprises a 37-bed aged care facility returning a net annual income of $104,832 plus GST.
Waterlea Lifecare’s 61-bed care facility offering full resthome, respite, dementia care and medical services is located at 50 McLauchlan Street, in Springlands, around 2km from the Blenheim CBD.
The medium scale purpose-built care facility sits on 5,121sqm of Urban Residential-zoned land, and provides annual net income of $402,896 plus GST.
“Institutional assets of this calibre, underpinned by high levels of government funding, must appeal to astute investors seeking a premium investment positioned in a sought-after healthcare sector experiencing strong and increasing pressure from New Zealand’s rapidly ageing population,” says Bhana.
- Article supplied by Bayleys
